Housing and Transportation Costs

After housing, transportation is the second-largest household expense, so any conversation about housing affordability must examine transportation costs.

As housing affordability becomes more problematic, many people are forced to move further and further away from job centers and “over-commute” as a result. In California's rural areas, high transportation costs often negate the relatively more-affordable housing. This combined “housing + transportation” cost can leave residents in rural and suburban communities with a cost-of-living comparable to their urban counterparts.

Over-Commuting

People who live near transit and job centers drive less, particularly lower income residents. More recently, however, those areas have become less and less affordable. Housing near transit is in high demand, and rents and property values near transit are 10 to 20 percent higher on average than similar homes further from transit. Modeling and analysis by the Legislative Analyst’s Office suggests “California’s high housing costs cause workers to live further from where they work, likely because reasonably priced housing options are unavailable in locations nearer to where they work.” When households move further from job- and transit-rich areas to find more affordable homes, they encounter higher transportation costs and longer commutes. Beyond the quality of life consequences for individual households, longer commutes also increase greenhouse gas emissions and decrease productivity.

Housing and Transportation Affordability

The Center for Neighborhood Technology developed a Housing and Transportation Affordability Index (H+T Index) that is widely used to examine housing and transportation costs.

Travel demands are determined by where people choose to live. However, that choice is greatly shaped by affordability. Then the proximity of jobs and services, density, and the availability of public transit affect transportation costs. For example, based on those factors, a household may decide that car ownership is necessary for access to jobs, schools, medical facilities, etc. In certain communities, higher housing costs can be mitigated by lower transportation costs (if less automobile travel is required). Conversely, a household seeking more affordable housing may end up further from jobs and services, resulting in increased housing and transportation costs.

Unlike housing affordability, which is widely accepted as paying no more than 30 percent of income toward housing, there is no official affordability definition for housing and transportation costs combined. However, there are discussions about defining a combined affordability threshold at 50 percent of income.

Learn more about housing and transportation in California’s Housing Future: Challenges and Opportunities (PDF).